How to spot the next encryption bubble: some thoughts based on technology and fundamentals
This article comes fromMedium, original author: Hansel
Odaily Translator |
Odaily Translator |
In the past year, if there were three words to describe the state of the cryptocurrency market, it might be: uncertain.
Since the beginning of 2018, the cryptocurrency market has been in a downward trend, and it seems that there is no bottom in sight. But soon, the market began to recover rapidly after entering 2019, and the price of Bitcoin was once close to 14,000 US dollars. At this time, the bulls shouted triumphantly: "Look, I told you a long time ago that the price of Bitcoin will Rising.” That didn’t last long, as the bears once again pushed the price of bitcoin below $10,000 — around $8,179.32 at the time of writing, according to data from Coinmarketcap.
Well, one thing needs to be explained before the official explanation, that is, we have a big assumption, that is: the next wave of bubbles will definitely appear. Without further ado, let's get to the point:
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Technical Analysis
If you trade in the cryptocurrency market, you will find that it is completely different from the traditional investment/speculation market. The traditional market will allow you to retest the support level, or retest the resistance level, and the market rules are relatively simple. But in the cryptocurrency market, even if the support or resistance level is established, you may encounter the opposite market trend, and nine times out of ten, the money in your account will be withdrawn before the target level you hope to achieve" Looted."
If you don’t understand the above paragraph, you may feel that the cryptocurrency market is being manipulated.
For example, if we look at the market trend in the past two months, you may feel that the market has been relatively stable, but just as there is always calm before the storm, every time the market stabilizes for a period of time, there will always be sharp fluctuations. A breakthrough upwards or downwards (Odaily Jun Note: This is indeed the case, the market decline at the end of September and early October caused the price of Bitcoin to fall to the $8,000 range). Those who don't understand technology may say: "You are not talking nonsense, the market is always going up or down." But the charm of technology is that it can help you make the best market forecast, and it can also be in a certain market. Stop loss or even profit within the tolerance range of the price level.
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Fundamental analysis
Fundamental analysis
In fact, we need to analyze several factors to judge whether the market will be bullish or not. To aid further analysis, it may be helpful to understand the 2013 and 2017 bull markets.
In 2013, Wall Street became interested in Bitcoin, and many people gradually accepted the concept of cryptocurrency, thus stimulating the market to rise. Then in 2017, Ethereum (Ethereum), as a decentralized network, launched a new method of financing cryptocurrency projects: Initial Coin Offering (ICO), which started the bull market of the year.
From this point of view, if there is a bull market in 2019/2020, there should be similar "stories". It is worth noting that the price of Bitcoin has actually started to rise slowly, but even so, it is not too late to enter the market. Here, let’s take a look at the three fundamental elements that constitute the next wave of bull (bubble) market (bubble):
1. Bitcoin block reward halved + Ethereum 2.0
If you still don’t know what the Bitcoin block reward halving and Ethereum 2.0 are, you can search for the answer yourself, and we won’t spend too much space explaining it here. According to the previously disclosed time, both of these things are expected to be completed in the first quarter of 2020.
Of course, assuming that Bitcoin has always had value, then this means that the upcoming block reward halving will make Bitcoin even more valuable. In addition, if the "Serenity" (Serenity) of Ethereum's Proof of Stake (PoS) can be successfully completed and delivered on time, then the price of Ethereum will naturally become higher and higher-although we have seen Ethereum hard fork many times Delay, presumably the transfer from proof-of-work to proof-of-stake should not be smooth.
However, if these things end up happening, there is no doubt that Bitcoin and Ethereum prices will slowly recover in the months leading up to the bull market. Therefore, we need to at least keep an eye on the upcoming Istanbul hard fork.
2. Cryptocurrency acceptance and popularity
In fact, we've seen a lot of companies push people to accept and use cryptocurrencies, including Facebook, but also Telegram and other social networks. Of course, they all face a lot of resistance.
The problem with Facebook’s digital currency, Lirba, is the centralization of resources, which made them a quick target for regulators. On the other hand, Bitcoin is decentralized, which is both an advantage and a disadvantage, because the decentralized nature is difficult for ordinary people to use on a large scale.
So, why do social media giants want to promote the popularity of cryptocurrencies? Quite simply, because these social media networks already have a very wide audience and target users. Considering how much the payments industry has improved over the past two years, security, usability, and electronic channels have all improved, so it's not hard to imagine cryptocurrencies being integrated into instant messaging apps in the near future and used by many. use.
3. Crypto funds and other stablecoins
Now there is a very interesting value proposition: after bonds, how should we model cryptocurrencies. A bond is a fixed-income investment in which you lend money to an institution or company and earn interest on it. Likewise, by staking your cryptocurrency to some fund or company, they will pay you interest. Of course, you may be able to get better returns if you continue to hold coins, or trade cryptocurrencies directly, but if you can get up to 10% (the actual number varies) if you stake cryptocurrencies, it is obviously more attractive. Therefore, you may choose to put your cryptocurrency in an institutional fund, at least it is much better than keeping 0% in a private wallet.
By the way, the controversial stablecoin USDT, don't you know that the supply of USDT has exceeded 4 billion U.S. dollars, but its real market value is only more than 2 billion U.S. dollars? Have you ever wondered where the "excess money" goes?
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The Next Crypto Bubble
Well, after reading the series of reasons listed above, discerning people have actually seen one thing: the current price of cryptocurrencies will not continue to rise forever. But on the other hand, it would be foolish and short-sighted to say that the cryptocurrency market will go down forever, because the cryptocurrency industry has so much innovation and is constantly evolving.
In the past few years, there have been many negative factors that have affected the price of cryptocurrencies, such as various shady partnerships, imperfect development work, hard forks, and so on. The only reliable way is to allow more funds to enter the cryptocurrency market and give people the confidence to put their money in cryptocurrencies, but the current market is still in an overly cautious state.
